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High: The House and Senate reach agreement on the economic recovery bill

CHRIS MATTHEWS, HOST: The House and Senate reach agreement on that giant recovery bill. Good news for President Obama.

Let‘s play HARDBALL.

Good evening. I‘m Chris Matthews. Leading off tonight: Nothing concentrates the mind like the prospects of an imminent hanging. Tonight we know the power of necessity. Faced with a plunging economy, a frightening spike in unemployment, dead-man-walking financial institutions and a zombie-like Wall Street, leaders in Congress, Democrats with a lonely trio of Republicans, come to an agreement on almost $800 billion in recovery spending and tax cuts.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The middle ground we‘ve reached creates more jobs than the original Senate bill and spends less than the original House bill.

(END VIDEO CLIP)

MATTHEWS: Meanwhile, a drumbeat of blame pounded through the Capitol as politicians engaged in the new indoor sport of publicly spanking Wall Street big shots, a now familiar jamboree of good feeling by the political class, grudging humiliation by their financial better-offs.

MATTHEWS: We‘ll talk to two members of Congress about both the giant recovery bill agreement today and the banking hearing you‘re going to hear a lot more from. And if you want to know why Americans are so outraged by the bankers, catch this. It‘s in today‘s “New York Daily News,” one of the country‘s great tabloids. Four top executives of Merrill Lynch pocketed—catch this -- $121 million in bonuses just before the taxpayers were called in to help finance a takeover of the company. Is this rot at the top, or what?

So how‘s it going for President Obama? Is he building the right constituency with these town meetings out there that show real people with real need? Is he picking the right enemies, Wall Street and Rush Limbaugh?

Well, here are two points of view from today‘s “Washington Post” op-ed page. Conservative Kathleen Parker starts off her column with the observation, quote, “The first however many days of Barack Obama‘s presidency have been a study in amateurism.” That‘s Kathleen Parker‘s view. Now, liberal Ruth Marcus says this. “Settle down. It‘s actually going rather well.”

Well, let‘s balance this out in our debate tonight. Let‘s see how Obama is really doing.

And candidate Obama campaigned on getting us out of Iraq, but did Bush

President Bush—dig so deep a hole in Iraq that it‘s impossible to climb out? And does that fact show what a bad idea it was, in the first place, to go in that country? A top military reporter from “The Washington Post” gives us a real horror story on America‘s decision to invade and occupy that Arab country and what comes next.

And wait until you see the HARDBALL “Sideshow” tonight. When a couple of groups supporting the economic recovery bill put out a cable TV ad targeting some Republican opponents of the bill, a press secretary for one of the Republicans said the press should take this as the congressman‘s response.

UNIDENTIFIED MALE: On your way to work tomorrow, instead of sitting around with your finger (DELETED), look around. There‘s a union out there called AFSCME and they‘re busting their (DELETED) for you doing a lot of (DELETED) work you take for granted.

(END VIDEO CLIP)

MATTHEWS: Well, you‘ll get it even with the bleeps when we show it in the “Sideshow.” It‘s obviously tongue-in-cheek, and the press secretary quickly apologized. We‘re going to show you that entire doctored ad, minus the obscenities, in the HARDBALL “Sideshow,” a little fun and games during hard times up on Capitol Hill.

But first, two members of the House Financial Services Committee, democratic member Gary Ackerman of New York and Republican congressman Peter King, also from New York. Gentlemen, thank you for joining us. What do you make of this, Congressman Ackerman? The agreement, apparently, is a $789 billion deal between the House and the Senate. It‘s between Harry Reid and Speaker Pelosi. It‘s got some compromise in it. There‘s going to be less spending on education than the House bill had, and health care, less on that. And a greater chunk of the bill, about 40-some percent, is going to be tax cuts.

Let‘s see what Harry Reid says first, the leader in the Senate.

Here‘s what he said.

(BEGIN VIDEO CLIP)

REID: Like any negotiation, this involved give and take. And if you don‘t mind my saying so, that‘s an understatement. Legislation is the art of compromise, consensus building. And that‘s what we did.

(END VIDEO CLIP)

MATTHEWS: Congressman Ackerman, are you confident or do you believe that the Democrats, especially the liberals, will go along with this new arrangement, this new compromise?

REP. GARY ACKERMAN (D-NY), FINANCIAL SERVICES COMMITTEE: I think so. I think with some strong dynamic leadership, which we do have in the House, I think the Democrats will go along with it. We haven‘t seen all the details. Of course, the devil is in the details. But I think most of us know that you have to have a bill and we‘ve got to do something, and this is as good a plan as anybody is going to come up with. And we‘re going to have to provide the votes to do it. Hopefully, we‘ll have enough Republicans to give it some bipartisan support.

MATTHEWS: Do you mean that, Congressman? Do you think some Republicans—looking at it from your side of the aisle, do you see some moderate Eastern Republicans jumping aboard?

ACKERMAN: Well, I‘d like to think so. I know when President Bush needed some help and he reached out to the Congress and we had to supply a lot of money, there was a lot of Democratic votes that were there. We try to act in a bipartisan fashion to do what‘s right in the interests of the country. And hopefully, that‘s what‘s going to happen. When push comes to shove, we‘ll see at vote time.

MATTHEWS: Congressman King, three Republican senators, Specter, Snowe and Collins, are aboard this deal. They‘re the requisite number to get that vote up in the Senate, that 60 votes they have to get. How about the House? No Republicans on the first time around. Will the compromise deal hold with any Republicans like yourself?

REP. PETER KING (R-NY), FINANCIAL SERVICES COMMITTEE: Like Gary, we haven‘t seen it. I would say it‘s probably unlikely, but I really can‘t speak for others. In my own case, based on what I‘ve heard second-hand, third-hand, there‘s probably still too much spending in it, as opposed to actual tax relief and focused infrastructure funding. But you know, we have not seen it. This is definitely a deal behind closed doors, and we‘ll probably find out later tonight or tomorrow what‘s in it. And I wouldn‘t expect to see too much Republican support. But again, we haven‘t seen the details yet.

MATTHEWS: Well, Congressman, let me ask you—Congressman King, let me ask you, and then Congressman Ackerman, it seems to me if a year from now—we can say all we want, but a year from now is the acid test because the voters are going to vote for Congress next year. They‘re going to decide whether this thing‘s turning around or not. And if it looks like it‘s turning around, I guess the president will get some credit. If it‘s not turning around, I guess he‘ll get some blame, a lot of it. Where will you be if it doesn‘t begin to turn around? Won‘t the Republicans be off base in not having supported this?

(CROSSTALK)

MATTHEWS: ... if things turn around.

KING: Well, first of all, all of us hope that it does turn around. If the economy does turn around, then the debate will be, Is it because of President Obama‘s recovery plan or was it something that was happening anyway? Was it forces that were already in place? And that will be the debate. I mean, you know, we had this back in 1993 and 1994 with President Clinton‘s tax plan at the time. It actually hurt the Democrats at the polls in ‘94.

But again, Chris, that‘s really off a year from now. And you know, I have to do what I think is right now. Gary has to do what he thinks is right. And a year from now, a year-and-a-half from now, we‘ll have a debate over whose policies were better and what brought about—which I do hope—sincerely hope there is recovery.

MATTHEWS: Let me ask you, Congressman Ackerman, will you blame the Republicans, if you get a good turnaround next year, for having opposed this only game in town, this economic recovery bill?

ACKERMAN: Well, I think that‘s up to the public. And I think the public certainly will blame the Republicans if the economy turns around, as Peter and I both hope that it will. You know, it‘s not really the blame game, but the public will draw its conclusions. I know that when we did a lot of tax cuts, which we did under the Bush administration, the question is, How did that work out for the American people? And I think the answer was disastrously.

I think a stimulus package has to have a lot of spending. Tax cuts are not very stimulating, although they‘re welcomed by the people who get them. We‘d all like them. But we understand that we‘ve got to get money into the system and we have to get public confidence up. The blame game is something we do play here in Washington, and we‘re going to see that at play in spades.

MATTHEWS: Well, let‘s take a look at Mike Capuano, the congressman from Massachusetts, from Tip O‘Neill‘s 8th congressional district. Here he is whacking the financial industry in New York in today‘s hearings, whacking away at them.

(BEGIN VIDEO CLIP)

REP. MICHAEL CAPUANO (D-MA), FINANCIAL SERVICES COMMITTEE: But basically, you come to us today on your bicycles, after buying Girl Scout cookies and helping out Mother Teresa, telling us, We‘re sorry. We didn‘t mean it. We won‘t do it again. Trust us. Well, I have some people in my constituency that actually robbed some of your banks, and they say the same thing.

The problem I have is that, honestly, none of us—America doesn‘t trust you anymore.

Start loaning the money that we gave you! Get it on the street. And don‘t say, Oh, well, we‘re not using that money for bonuses. Come on! Money‘s all of a sudden not fungible entity? It‘s fungible anywhere else but not in your entities. Get our money out on the street!

(END VIDEO CLIP)

MATTHEWS: Well, Congressman Ackerman, is that demagoguery, or has he got a point? I mean, it‘s not like the old days of Mr. Potter at the bank, sitting on a million bucks and deciding whether to lend it or not. From what I understand from the experts, it‘s the inability of banks to get money to lend.

ACKERMAN: Well, I‘m not sure if it was demagoguery, but it certainly was stimulating. And he was trying to stimulate these guys to put the money out. We gave it to them for that purpose. And for them to sit on it, make their balance sheets look better, do bottom fishing and buy cheaper institutions and other banks so that they can make more money down the end, make their balance sheet look better, is unconscionable when people are hurting.

People are looking, as he pointed out, to sending their kids to school, and they need college loans. They need to buy cars. They need to lease cars. They need to buy homes. They need to refinance. They need to pay off their credit card debt and go about life as usual. We provided tons of billions of dollars to do that, and it went into the pockets of a bunch of greedy people. Demagogue away, as far as I‘m concerned.

MATTHEWS: But I don‘t understand who—why would you tell a business person who makes money by knowing how to make money—that‘s what they do for a living, by the way, these bank presidents. These aren‘t honorific titles. They‘re supposed to be good and have some moxie. If they can get 7 percent on a jumbo mortgage right now—that‘s pretty good return these days—why don‘t they lend the money? Why do you have to tell them to do it? I don‘t get this stuff. If there‘s money in banking and these guys all have nice suits and live well and they‘ve been smart in the past, why don‘t they lend the money in their own interests? I don‘t get it.

ACKERMAN: Well, first of all, they know how to lend money, but what they do know is how to make money, and they‘re making money for themselves. They‘re not putting it out in the streets. And what they‘re doing by raising rates at this critical time, when we‘re looking to drum up more business and have public confidence, is they‘re acting like war profiteers. They‘re raising the rates. They‘re lowering people‘s credit lines. They‘re taking away lines of home equity that have been well established by people who‘ve personally done nothing to violate the terms or conditions of their own personal loans and are yet suffering from this. These people have to sometimes be yelled at and scolded. They have to be reminded...

MATTHEWS: Congressman King...

(CROSSTALK)

MATTHEWS: OK, Congressman King, let‘s talk about the free enterprise system and the notion we have that smart, rational thinking, and let‘s face it, self-interest, works for the whole country. It‘s a basic belief of American life, that the self-interest of a business person is good for everybody. How come now we don‘t trust that anymore?

KING: Well, I think we should more than—I would more than Gary does, put it that way, because the banks—I‘m not here to defend the bankers. But they are in a tough situation that the regulators require them to have more reserves before they lend. So they‘re sort of caught in a Catch-22.

Also, we see how difficult this is because Treasury Secretary Geithner was one of the architects of the original TARP plan, has had almost four or five months now, and he still has not come up with a plan which can, in effect, force the banks or put more pressure on the banks to loan this money out. So it‘s not as simple as Gary and some of the others are making it out to be, as Geithner I think proved yesterday with his speech.

Also, if I can say, I do look forward to the debate next year with Gary on tax cuts. It was not tax cuts that caused this problem. It was a crisis of credit. And it‘s a whole different issue. And I look forward to that debate next year.

But on this, I think it‘s unfair to be piling on the banks. Listen, some of their abuses have been horrible. The corporate jets and the extravagant bonuses, all of that is indefensible.

But as far as the loaning of the money, one of the reasons they got in trouble was for loaning too much money out. Now we‘re saying they should loan it. And they‘re getting pressure from us to loan it and they‘re getting pressure from regulators not to loan it. We have to come up with a happier medium, and I think that‘s what Geithner is trying to do. And so far, he hasn‘t come up with a plan that does that.

MATTHEWS: Yes. Congressman Ackerman, who do you trust less, bankers or that guy selling peanuts?

ACKERMAN: If the peanuts are salted, it tastes a lot better. But this is getting pretty bitter. I don‘t—I‘m not trusting the bankers. They‘ve not earned our trust right now. They‘re hoarding this money, and it really should not be their decision to make. The American taxpayers are putting this money up. It‘s their hard-earned money coming out of the taxes that they pay, hoping to stimulate the economy and get things jump-started again. These guys are not doing that. It should not be their policy to make. We are making public policy, gave them billions, and they‘re basically sitting on it and taking it home in bonuses.

KING: Chris, that‘s why...

MATTHEWS: Congressman King—Congressman King. I‘ve got to ask you a political question. This is HARDBALL, and you‘re a pal of the show. Are you running for the Senate?

KING: I‘m certainly looking at it, and I very well might. It depends. If I think the money is going to be there, I will run.

Again, getting back to Gary‘s point, though, I look forward to Tim Geithner—you know, what he‘s going to say because, again, it is not that easy to get the money out there. If Geithner thought it was, he would have proposed it yesterday instead of backing away the way he did.

Tomorrow on HARDBALL, by the way, Speaker of the House Nancy Pelosi‘s going to be here. We‘ll have a serious interview with her. She‘s become kind of the target of the Republican sharpies out there. They don‘t think they can beat Barack, this month at least. He‘s too popular. So they‘re targeting her. I‘m not sure—it may be somewhat smart. We‘ll find out what she thinks.

And by the way, coming up tonight: Three weeks on the job, what are we learning about the kind of president Barack Obama‘s going to be? We got a pretty good look at him the last couple weeks. Let‘s have a couple people on who know their stuff. Mark McKinnon is one sharp dude, I was about to say, a Republican—a guy who advises Republicans. And of course, Karen Finney works for the DNC. She knows her stuff, too. Be interesting. We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Just 22 days in office, that‘s Barack Obama‘s record so far and a few things to brag about. He expanded health insurance for young people in that SCHIP bill he signed. He ordered the Pentagon to plan an end to the Iraq war, at least. We‘re going to get to that later in the show. He‘s brought some sunshine in on some of the issues. He signed the Lily Ledbetter Act, which is equal pay. And he‘s hired actually three Republicans to be in his cabinet, which is really a record-setter. And they‘re pretty significant posts.

But with an economic mess on his hands and nearly unanimous opposition from Republicans in the House of Representatives, let‘s ask that timeless Ed Koch question, “How‘m I doing?” Mark McKinnon writes for Thedailybeast. That‘s Tina Brown‘s—I think I‘m going to write something for those in the next couple days. He was an adviser to John McCain‘s presidential campaign. And Karen Finney is here.

McKinnon, you are one smart hombre. I see you‘re wearing your cowboy clothes. Let me ask you this. Did you drop out of the campaign because you didn‘t want to campaign against Barack Obama at some point? You were with McCain, but then you pulled out. Is that what happened?

MARK MCKINNON, REPUBLICAN STRATEGIST: That‘s right. When I joined the campaign in January of ‘07, I wrote a memo to the campaign saying that if in the general election, it turned out to be John McCain and Barack Obama, I‘d step to the sideline. I still supported McCain, but I just didn‘t want to be the tip of the spear attacking Barack Obama.

MATTHEWS: Why?

MCKINNON: I liked his candidacy. I think it‘s—you know, I think it says—it‘s great for the country. I disagree with his politics, but it was an historic candidacy. And I think he‘s got good character. I think he has good integrity. I disagree with his politics, but I think he‘s a good man. And I wish him great success.

MATTHEWS: I know a lot of Republicans like you, anyway—not a million, but I know a lot. Let me—let me...

MCKINNON: Well, I think he‘s doing pretty well. You know, this is the most challenging time that any president has seen maybe, you know, ever, certainly in our lifetime. And you know, he‘s got a stimulus bill now. And the fact is that the left‘s not happy and the right‘s not happy, so that probably means it‘s a pretty good bill. It‘s got 65 percent spending, 35 percent tax cuts. You know, I would prefer to see it the other way around, but President Obama was right when he said, You know what? We won.

And, so, I‘m just glad that it has some spending cuts in it—some tax cuts in it. So, I think it‘s a pretty healthy balance. The fact is, you know, it—it‘s got some spending, some tax cuts.

And, as—as the leader said, it‘s got—it‘s got more jobs in the Senate bill, and it costs less in the House bill. So, that‘s a good thing.

Karen Finney, I know you‘re a big D, but let me ask you for the element question here.

He‘s been a president for three weeks now. And I think people are really used to him rather quickly. They got quickly used to him. And I don‘t think he has any rough edges that people don‘t like. He‘s not done anything wrong.

What I found a fascinating point is that he goes to Camp David. He‘s on the helicopter. He goes down bowling in the bottom of the EOB.

KAREN FINNEY, COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE:

Yes.

MATTHEWS: It‘s like he‘s doing those Orangemen‘s Walk they do in Northern Ireland, where they walk around just to prove they own it all. You know what I mean?

Well, look, I think he‘s definitely gotten comfortable in the role. These are tough times. And I agree with Mark. I think he‘s done—probably for different reasons, I think he‘s done a good job.

But I think what matters about what he has done is not just the substance of what he‘s done, but that he has done some things that he said he was going to do. And that starts very quickly to build the American people‘s confidence that, OK, he campaigned on a set of things, and he did it. He is starting to do what he said he‘s going to do.

We haven‘t had confidence in our president in a really long time. So, I think that makes a—the style and substance makes a big difference.

MATTHEWS: OK. Let‘s go to style, then substance.

These hearings he‘s had with the people, he‘s gone out there to real people with—I mean, if they have—if they have ringers out there, I didn‘t think they were ringers—that African-American woman without a house, that young guy, that very nervous guy who works at McDonald‘s, desperate for a better job, those people had the street quality of reality. They were the kind of people you meet in American life if you get out there.

What did you make of that? Is—is it too dangerous for him to get that close to the street, too close to reality, where he will really be judged by results, Mark?

MCKINNON: Well, no, I think it‘s great to reach out. And I think that‘s what people expect of him. They—they—they think he has a real touch with the heart of America. And he‘s got to keep proving that.

You know, and I think that—I know you would love for me to throw some red meat, but I‘m going to go vegetarian on you here...

(LAUGHTER)

MCKINNON: ... and sing a little kumbaya.

You know, I think—I think the fact that he‘s been out a lot, and—and he‘s using his equity—he has got to spend his capital now. This may be the most important time in his presidency. And he‘s very popular. He‘s more popular than leprechauns and unicorns right now. So, he should spend that capital, move it.

And—and, as I said, the stimulus bill will be a very important piece of his legislation. So, it‘s important he got that done.

MATTHEWS: Well, he‘s moved up a number of points, like eight points, in the last week. So, he‘s doing something right in the Gallup poll. He‘s going up. So, he‘s building capital by going out, maybe, meeting those people.

(CROSSTALK)

FINNEY: He‘s building capital, but he‘s spending capital and he‘s using the bully pulpit exactly the way the president should.

I mean, he‘s popular with the American people. So, go back to the American people. We had two days of coverage about the people here in Washington. Put a little bit of pressure, not just on Republicans, but on Democrats as well.

MATTHEWS: We‘re going to show this. I don‘t have this SOT ready, but let me read it to you. This is yesterday at Fort Myers in front of a crowd that voted for—well, here it is this week. Let‘s see. We have got this quote. This is an amazing quote, I think, for politics.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The one concern I have got on the stimulus package, in terms of the debate and listening to some of what‘s been said in Congress, is that there seems to be a set of folks who—I don‘t doubt their sincerity—who just believe that we should do nothing.

Now, if that‘s their opening position or their closing position in negotiations, then we‘re probably not going to make much progress, because I don‘t think that‘s economically sound and I don‘t think what—that‘s what the American people expect, is for us to stand by and do nothing.

(END VIDEO CLIP)

MATTHEWS: Well, here‘s a quote from Florida where he said—in addition to that, here‘s what he said.

“I expect to be judged by results. And—and there‘s no—you know, I‘m not going to make any excuses. If stuff hasn‘t worked and people don‘t feel like I have led the country in the right direction, then you‘ll have a new president.”

Mark McKinnon, I have never seen a guy play big casino like that. They always hedge their bets. They always say, well, if it doesn‘t work out, we did our best. We will try something else.

Here‘s a guy saying, if this big attempt of this, this giant recovery bill that is getting passed this week and signed by him—he‘s basically saying, if this doesn‘t begin to turn things around by next year, you will know it, and I‘m—I‘m—I‘m a loser.

MCKINNON: Yes. He put it all on red. And I think that was smart.

And I think it was also smart when he went out and, you know, hit all the networks, and—and campaigned heavily for the plan, and also apologized publicly for some of the problems he had with his appointees.

FINNEY: You know, there‘s one other thing that‘s been really important in the last three weeks that I hope we‘re going to talk about.

MATTHEWS: Well, I guess we are now.

(LAUGHTER)

FINNEY: Michelle Obama has done a fantastic job also, sort of in the way she has started to raise her profile as the first lady.

I think she also reminds people that both she and the president come

from pretty humble beginnings. And I think that‘s as important in, again,

this style and substance period, to remind people he‘s of the people. He‘s

you know, he knows what it is to struggle. I think that‘s really important.

MATTHEWS: Yes. I think—she‘s on the cover of “Vogue.” What an amazing shot that is. That is a photoplay of hers. I‘m—I think I‘m going to see her tonight at Ford‘s Theater. Anyway, I will say hello for...

MATTHEWS: I doubt I will get that many opportunities. Never had one before. Maybe I will get one tonight.

(LAUGHTER)

MATTHEWS: Mark McKinnon, Karen Finney, thank you both for coming on and duking it out in your own very nice way.

Up next: What happens when a couple of groups supporting the economic recovery plan take out a TV ad against a top Republican congressman, and his guy whacks back at them in a somewhat off-color way, dare we say? The congressman‘s spokesman strikes back in a way befitting the “Sideshow.” And we‘re going to have it for you in a minute. Wait until you see this.

We‘re going to bleep it, but you will be able to fill in the blanks.

You‘re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the “Sideshow.”

First up: fun and games in the worst of times.

It starts with this ad from the public employees union AFSCME and a labor-backed group called Americans United for Change targeting Republican opposition to President Obama‘s giant recovery bill.

Stocks finishing higher after House and Senate negotiators reached a deal on a $789 billion economic stimulus package. The Dow Jones industrial average gained 50 points. The S&P 500 picked up six. And the Nasdaq gained by five.

That came despite testimony by the CEOs of eight top banks. They were grilled today at a congressional hearing. Angry lawmakers demanded to know what they had done with the combined $125 billion in taxpayer bailout money they have received. The CEOs were contrite and said they are making loans.

And oil fell another $1.99, closing at $35.94 a barrel. That‘s after the government reported a big increase in inventories last week. However, gasoline inventories fell, and futures jumped another 2 cents a gallon today.

That‘s it from CNBC, first in business worldwide—now back to Chris and HARDBALL.

MATTHEWS: Let‘s go.

We‘re going to Tom Ricks right now, despite that opening. We will do the “Sideshow” a bit later.

Let‘s go right to Tom Ricks of “The Washington Post.” He‘s written an amazing new book called “The Gamble.”

Tom, I was struck by your interview on “Meet the Press” with David on Sunday. And I want to follow up, rather than repeat that.

You left me with a real concern that the surge, although it got great reviews as a military operation—it reduced the violence and the killing, not just of our people, but by our people, all those months—it didn‘t accomplish the goal of creating a political situation in Iraq that we can leave behind.

Are we just as deep in the hole over there as we were before we started that surge?

THOMAS RICKS, MILITARY CORRESPONDENT, “THE WASHINGTON POST”: We‘re not just as deep in the hole as we were, because Iraq was really coming apart at the seams before the surge began.

But it‘s not as good a situation as people back here seem to think. The closer you get to Baghdad, the more you realize that this war is not over. It‘s changed several times. It‘s morphed, from an invasion, to occupation, to insurgency, to a surge. It‘s morphing again, but it is certainly not over.

MATTHEWS: The smart people, like Brent Scowcroft and Jim Baker, warned—they warned as much as they could this new president of ours, George W. Bush, not to go in, because they said, if we go in there and get rid of that tyrant, Saddam Hussein, as bad as he is, the replacement situation will be chaos, and it will be unending civil war, and it will end up making Iran stronger. Those groups like Sistani and Muqtada al-Sadr, all those people are going to fight with each other until doomsday.

Has anything changed from their prescription? Were they right? And is that going to be the future?

RICKS: I think that analysis is fundamentally correct, and has been proven out over the last several years.

There were good reasons not to do this. In “The Gamble,” one thing that really struck me was that a lot of people trying to work on the war in ‘07 and ‘08 agreed with that analysis. Ambassador Ryan Crocker, for example, reveals in the book that he had essentially opposed the initial invasion of Iraq, thought it was a mistake.

And I thought it was quite noble of these guys to step into something they thought was a mistake...

MATTHEWS: Yes.

RICKS: ... or had been badly handled, and try to fix it, as best they could.

MATTHEWS: Did any smart people think it was smart to go into Iraq, except for the neoconservatives, who had this sort of ideological drive toward that—that mission? Did anybody outside that narrow group of people—there‘s about 20 neocons, as many as I can count—that really believed in this war?

RICKS: I think that probably gives them too much credit and too much blame.

There were a lot of people back then who thought this was the right thing to do. Remember, the vice president of the United States flatly said there was no doubt that the Iraqis had weapons of mass destruction. People tend to forget that after the passage of so many years.

But when the top people in the United States government assert flatly that something is true, people tend to believe them.

MATTHEWS: And you think that was the reason they had for going to war?

RICKS: I don‘t know...

MATTHEWS: You think that‘s why those people in the administration supported this war, because of—they thought there was nuclear weapons going to be in the hands of Saddam Hussein? You think that‘s why they went to war? Because I disagree with you.

RICKS: I think they kind of drifted into it. I‘m not sure there was ever a formal decision to go to war.

What I do know is, they took their eye off the ball. General Jack Keane, for example...

MATTHEWS: Yes.

RICKS: ... who was instrumental in the surge, opposed the invasion at the beginning, said, as a—the vice chairman of the Army—vice chief of the Army, said, no, don‘t do Iraq. Stay in Afghanistan. Keep two divisions on the border. Get bin Laden.

And, instead, the Bush administration took its eye off the ball. And now Obama inherits probably the worst foreign policy situation any new president has ever inherited. And the scary thing about it is, it isn‘t even his worst problem. His worst problem, of course, is the economy.

MATTHEWS: The history of the Middle East is written by colonial powers from the outside, whether they be the Brits, the French or the Russians, going in there under the Soviet ideology, the monarchist ideology of the British, or our democratic ideology, and leaving there, and the Middle East returning to the Middle East the minute we leave.

Is there any reason to believe that, when we leave Iraq, eventually, in big numbers, we leave it, we basically leave that country, it won‘t revert back to being what it was before, a country who will have hostility towards the east, but mainly hostility among itself, warring factions between Sunni, Shia and Kurd?

What will—does anything look any different from that, for having been there and losing all our lives there?

RICKS: That‘s true as...

MATTHEWS: Anything changed?

RICKS: That‘s true as far as it goes.

But the chance is, it will be much worse than it was when Saddam was there. Remember, Saddam was kind of an aging, toothless tiger. He really didn‘t have weapons of mass destruction. He didn‘t have a decent army. He wasn‘t a threat to anybody.

When we leave, we have armed to the teeth many Iraqis. We have trained up and organized a Shiite-dominated army. We have made friends with the Sunni insurgency, put them on our payroll, helped them organize. So, there‘s a lot of gasoline that Americans have potentially poured on this fire here.

Iraq was not going to cause a civil war or get into a regional war. If we left right now, that is a live possibility. So, the downside here is enormous. And Obama is going to have to pick his way through it. And I think that‘s one reason that he‘s going to find out he is stuck in Iraq.

RICKS: Yes, of course it was. I don‘t think you will find any disagreement on that.

MATTHEWS: OK. Let‘s go to the—let‘s go to the issue.

I‘m kind of a Churchill buff, as a lot of people know. And I do know that his first campaign was a punitive operation, the Malakand Field Force back in the northwest territories of India.

It seems to me we‘re right back in that trouble area right now. It‘s now northwest territories of Pakistan. That area looks to me like that‘s going to be the hell we pay for years to come.

RICKS: That area there, I think, is the most worrisome area in the world. I think one thing I like about the new administration is they began to talk about the war as the Afghan/Pakistan war. You notice that Ambassador Holbrooke in his talk in Munich the other day referred to the Af/Pak situation. That‘s the smart way to go.

You can‘t just deal with Afghanistan and hope that the thing will work out. As a friend of mine, Andrew Wexman (ph), says, it‘s hard to win a war in Afghanistan when the enemy wants to fight it in Pakistan. Pakistan could be a real nightmare.

MATTHEWS: Can we ever cut a deal with elements of Taliban that don‘t support al Qaeda, the people that came and killed us? Can we find a way to deal with the indigenous fundamentalist forces in that country, if we have to?

RICKS: I think you can, because what Petraeus did in Iraq isn‘t a precise recipe for Afghanistan, but the attitude is right. Disaggregate your enemies. See if you can peel off people and find some common ground. Some of the insurgents were happy to be put on the American payroll. Fine, here‘s your cash. Some people wanted respect. Fine, he gave them respect. Some wanted a seat at some table. I think you‘ll see him do that in Afghanistan with Holbrooke, try to peal off parts of the Taliban. Remember, some of these people, before they were our mortal enemies, were our mortal friends against the Soviet Union. There are maybe ways to reach out to these guys.

MATTHEWS: When are we going to learn? Anyway, thank you Tom Ricks. You‘re going to help us learn. Tom Ricks, the name of the book is “The Gamble.” You were so great on “Meet the Press” and you‘re so impressive, sir. Thank you for writing this book. People ought to read it who care about the mistake we‘re in over there, whether we can ever get out of it.

Up next, with trillions being talked about to save the economy right now and create some millions of jobs out there, what are the political stakes for the president? He said in Florida, judge me by my product. If this thing doesn‘t work, this giant spending bill doesn‘t work, blame me and dump me. What an amazing statement. We‘re going to talk the politics of this coming up next in the fix. You‘re watching HARDBALL.

MATTHEWS: Back to HARDBALL. Here‘s some fun and games on the worst of times. It starts with this ad from the Public Employees Union AFSCME and a labor-backed group called Americans United for Change, which targets Republican opposition to President Obama‘s giant recovery bill.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Eighty percent of Americans support a plan like President Obama‘s to create jobs. But Republican leaders, they‘re just saying no. No to changing the failed economic policies of the past eight years.

(END VIDEO CLIP)

MATTHEWS: Well, when a news organization, the “Politico” asked number two House Republican, that was Congressman Eric Cantor, about the ad where he was targeted, a staffer for Cantor sent back this send-up of a 1970s AFSCME ad. Here it is, by the way, with lots of bleeps added.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hey, find a way to work the mines instead of sitting around with your (EXPLETIVE DELETED). Look around. There‘s a union out there called AFSCME and they‘re busting their (EXPLETIVE DELETED) doing a lot of (EXPLETIVE DELETED) work you take for granted. For example, we pick up your (EXPLETIVE DELETED) garbage. We‘ve got balls out there who keep your kids from getting run over by some (EXPLETIVE DELETED). We dug up the holes in the road, so you don‘t (EXPLETIVE DELETED) up your car. We push around a lot of little old ladies from Florida.

We‘re out there zapping rats and roaches and making sure your kids don‘t drink (EXPLETIVE DELETED) from no (EXPLETIVE DELETED) water fountains. We‘re (EXPLETIVE DELETED) AFSCME, amalgamated federal—hey I don‘t what the (EXPLETIVE DELETED) means. All I know is we‘re hard working, tax paying people like you. And we don‘t take (EXPLETIVE DELETED) from nobody. You got that (EXPLETIVE DELETED)?

AFSCME, the (EXPLETIVE DELETED) union that works for you.

(END VIDEO CLIP)

MATTHEWS: You know, despite all the crass language—after you got that posted, the Republican Congressman staffer said it was just a joke sending that up. In fact, as an official response—it was not an official response. He also said, quote, I apologize to AFSCME. He apologized to AFSCME “for my inappropriate e-mail containing that old video. Let me be clear, we know people are hurting in these trying times and House Republicans completely agree that we must pass an economic recovery bill that preserves, protects and creates jobs for Americans facing these economic challenges.”

Anyway, we have Howard Fineman joining us right now. He‘s an MSNBC analyst. Of course, he‘s with “Newsweek.” And Perry Bacon of the “Washington Post.” Here‘s a young staffer on the Hill, Howard, who when he got hit with this ad blasting his boss, Eric Cantor, the young hot shot from Richmond, he sent back this old version of an AFSCME ad, which sounded like Tony Soprano talk. But you know what, I like the ad. I think it made a good case for AFSCME. It had a street corner accent, with some of the f-bomb thrown in. But it made a case for what AFSCME better than a lot of other ads have.

HOWARD FINEMAN, “NEWSWEEK”: I thought it was pretty funny, except for the fact that nobody is laughing right now in this economic situation.

MATTHEWS: I know.

FINEMAN: That‘s why he had to apologize and so forth. By the way, Eric Cantor is a guy from Virginia, in a district that he‘s a Republican in. But I can guarantee you, in his next election, there are going to be a lot of union volunteers working for whoever is going to run against him.

MATTHEWS: Because?

FINEMAN: Well, because they‘re not going to take that lying down.

MATTHEWS: Perry, thanks for joining us as well. I want you both to respond to this. It seems to be that you fight what you can. And the Republicans have decided they can‘t fight Barack Obama, the president right now. President Obama is untouchable. His numbers are actually going up about seven points this week in the Gallup Poll. People like his meeting out there in the town meetings. They like him fighting for tax cuts and his stimulus spending. They like the whole shebang.

So they‘re going after Nancy Pelosi. They‘re going after the other Democrats. What do you make of that strategy?

PERRY BACON, “THE WASHINGTON POST”: Yes, the Republicans have been very explicit about saying, in fact, that they‘re not going to attack Obama. Their argument, if you talk to them privately, is Obama has a significant approval rating; why don‘t we attack Congress, which has a 20 percent or 30 percent approval rating.

MATTHEWS: It‘s not 20. Perry, I‘m stopping you right there. What poll has them at 20 percent? The Republicans are down about 30. The Republicans in Congress are down around 30. The Democrats are up about 40 percent or 50 percent. That‘s all. Not 20 percent. Go ahead.

MATTHEWS: It just isn‘t that low. I mean, that‘s what the Republicans are saying.

FINEMAN: It‘s not exactly great, either.

MATTHEWS: No, it‘s worse than Obama.

FINEMAN: What they‘re trying to do, as Perry was saying—What the Republicans are trying to do is say that this is typical old Democratic spending stuff. The question is whether this bill is called spending or jobs. That‘s what the argument is about. For a week or so, the Republicans had the upper hand there, talking about how this was a spending bill, describing each individual piece of it. And in the last few days, I think Obama‘s done is a pretty good job, the president, has done a good job saying, no, no—and his allies have said—this is about jobs. That‘s what the main point is here.

MATTHEWS: Perry Bacon, let me ask you, is there anything in the report—we had Peter King on from New York, a Republican, who sometimes might be called a moderate, because he‘s from the east coast. I guess, we always assume if you‘re from a moderate part of the country, you‘re a moderate. There‘s no Republicans joining this ticket. The only ones are Specter, who is from a purple state, actually a blue state now, Pennsylvania, and a very blue state, the two senators from Maine. They have to sort of do something like this.

But all the Republicans in the House are voting the other way, it looks like. Doesn‘t it?

BACON: I think, Chris, at the end of the day, the second time this comes around, you‘ll see some House Republicans in some Purple or Blue states—I would say like Mike Castle in Delaware. I think you might see three, four, five Republicans in the House vote for this. The thing that has changed here is there aren‘t a lot of House Republicans, particularly, who are moderates left. The Democrats have been beating the ones in the Northeast the last two years pretty severely. So the Democrats have created a problem by winning all these districts in these states that might have sort of more liberal Republicans, which means they have a big number of Democrats to start with. They have 58 Democrats to start with. But they have a hard time to find the other two or three Republicans in the Senate to get something approved.

MATTHEWS: Isn‘t that fascinating what he just said? What happens is when you win a big election and you win those middle of the road Congressional seats, you knock out all the ones that might lean your way. You take them away so they can‘t join you. Then you find yourself with a lot of Blue Dogs, if you‘re a Democrat. You‘ve got a bunch of people that are a little more conservative than the other Democrats, because they represent these middle of the road districts.

FINEMAN: We‘re in the phase of the oil business that they call tertiary recovery. You‘re pumping stuff into the ground to get it back out. If you‘re look at where they‘re advertising, where AFSCME and its allies are advertising against Republican House members—I looked at it. There‘s Missouri, West Virginia, a couple in Pennsylvania, three in Ohio, three House members in Ohio, and Senator Voinovich in Ohio. Typically, always, Ohio, where it‘s a swing state with still some swing districts, is where the unions are advertising to try to force the few Republicans that they think they can get into the Democratic camp.

MATTHEWS: We‘ll come back. I want you both, starting with Perry, to respond to this surprising statement. The president of the United States has said basically judge me by my success or failure. Stick it to me. Dump me as president if you want to if I don‘t succeed with this economic recovery plan. I‘ve never heard a president put all the chips on the table like this guy‘s done. We‘ll be right back with Howard Fineman and Perry Bacon for more of the Fix.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: I expect to be judged by results. And there‘s no—you know, I‘m not going to make any excuses. If stuff hasn‘t worked and people don‘t feel like I‘ve led the country in the right direction, then you‘ll have a new president.

(END VIDEO CLIP)

MATTHEWS: We‘ll have a new president. We‘re back with Howard Fineman and Perry Bacon for more of the politics fix. I have to tell you, Perry, I‘m not used to politicians talking like this. It‘s like, hey, look, I‘m here to play. If I don‘t win, I lose. I‘m out of here.

BACON: Chris, I suspect if we don‘t have the job growth in four years he‘s predicted that he will, in fact, come up with explanations and what might be called excuses even. That said, it was a pretty bold statement to say I‘m committed to this agenda. If it doesn‘t work, judge me on the results. I think he‘s very much committing his presidency to the stimulus and now the money we‘re giving to the banks and his general economic plan. He‘s committing his presidency to the economic agenda he proposed.

FINEMAN: This way he gets credit. And he said—I love the fact he said it as bluntly—I‘ve never heard it this early in the administration.

MATTHEWS: You called this to my attention.

FINEMAN: I just think it‘s amazing. He‘s also saying, hey, I won the election. I‘m calling the stimulus thing and the bank thing. Go with—

MATTHEWS: I like your handshake.

FINEMAN: He‘s saying, go with me. This is my stuff. Go with me. You know, so much for bipartisanship. I won. I‘m doing this. If I‘m wrong, I‘m going to lose. Go with me.

MATTHEWS: I think he‘s back in town.

FINEMAN: He‘s, you know—so much for the fine filigree of bipartisanship. He is saying, I won. I‘m going to do it. If I‘m wrong, I‘m going to lose. Let‘s vote.

MATTHEWS: Let‘s look at it from the other way, politically, as you cover this story, Perry. It seems to me the Republican party has to rebuild. They‘re almost down to a—they‘ve got 41 members, once Franken comes into town and gets seated. It looks like he will. That‘s 41 Senate seats. They‘re getting back down to the level they were in the ‘60s. They‘re shrinking as a party. If they take a couple more losses next time, they‘re going to really be in trouble.

The House side, I don‘t think a Democratic incumbent has lost in a long time for re-election, either to the Senate or the House. They‘ve got to do something different than they‘ve been doing? Can they just keep saying, cut taxes? That‘s all they say. Republicans, cut taxes. That‘s what they say.

BACON: I think you‘re right. In this bill, they‘re looking like—they‘re very wary of appearing to be sort of the party of no. But when everyone votes against a bill, you like the party of no. I think they are doing a lot of talk. You saw that Bobby Jindal is going to be speaking on February 24th when Obama speaks, gives sort of a State of the Union Address, not really called that. Jindal is going to be speaking for the Republicans. They‘re looking for new figures, who are sort of more positive and who have different things to say from out in the states. I think that‘s the plan for the future of the Republicans.

MATTHEWS: They‘re looking for innocence. Let‘s be honest. They‘re looking for someone that can‘t be blamed. Thank you Howard Fineman. Sorry for yelling at you, Perry. You were right, I think. We‘ll take a look at Nancy Pelosi and see how she‘s taking the hits. Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Our special guest, as I said, the speaker of the House Nancy Pelosi, tomorrow night on HARDBALL. Right now, it‘s time for “1600 PENNSYLVANIA AVENUE.”